Shell sees inflation, politics capping LNG exports

Inflation and US domestic politics are likely to limit the amount of LNG exported from proposed projects in North America to around 60 MMtpy to 70 MMtpy over the next decade, Royal Dutch Shell's chief financial officer, Simon Henry, said.

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By SELINA WILLIAMS

LONDONInflation and US domestic politics are likely to
limit the amount of liquefied natural gas (LNG) exported from
proposed projects in North America to around
60 million tons per year (MMtpy) to 70 MMtpy over the next
decade, Royal Dutch Shell's chief financial officer, Simon
Henry, said.

Currently, companies including ExxonMobil, ConocoPhilips, BP,
Sempra Energy, Cheniere Energy, Shell and Apache are seeking to
export LNG from the US and Canada in efforts to find more
profitable markets amid a continent-wide gas glut, due to the
shale gas boom, that has depressed prices.

Companies are hoping to capture value for cheap North American
natural gas in energy-hungry markets in Asia, where gas sells
for several times more than the US price.

Shell estimates that projects to export around 130 MMtpy
of LNG from the US and Canada combined are on the drawing
board.

Constructing the export
infrastructure alone would cost around $300 billion, with
additional costs to develop the gas production to support the
projects, Mr. Henry said.

"If you get inflation, which you certainly would if everyone's
building at once, that's going to be a constraint. The other
constraint is going to be in Washington [D.C.], where, at some
point, the [US] government will decide that exporting cheap
American energy and cheap American jobs to our competitors is
no longer acceptable," Mr. Henry told reporters on the
sidelines of an industry event in London.

To date, only Cheniere Energy has approval to ship 2.2 billion
cubic feet per day of LNG from the Sabine Pass export facility
in Louisiana to countries not covered by US free trade
agreements.

Dow Jones Newswires

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